To continue our revival of old blog posts, today we have our #2 most popular blog from last July. Pentaho is now 7 years old, with sales continually move up and to the right. In a crazy economy, many are asking, “What is the reason behind your growth and success?” Richard Daley reflected on this question after reporting on quartlery results in 2010 .

More than doubled new Enterprise Edition Subscriptions from Q2 2009 to Q2 2010.

Exceeded goals resulting in Q2 being the strongest quarter in company history and most successful for the 3rd quarter in a row.

Became the only vendor that lets customers choose the best way to access BI: on-site, in the cloud, or on the go using an iPad.

Led the industry with a series of market firsts including delivering on Agile BI.

Expanded globally, received many industry recognitions and added several stars to our executive bench.

How did this happen? Mostly because of our laser focus over the past 5 years to build the leading end-to-end open source BI offering. But if we really look closely over the last 12-18 months there are some clear signs pointing to our success (my top ten list):

Top 10 reasons behind Pentaho’s success:

1. Customer Value – This is the top of my list. Recent analyst reports explain how we surpassed $2 billion mark during Q2 in terms of cumulative customer savings on business intelligence and data integration license and maintenance costs. In addition, ranked #1 in terms of value for price paid and quality of consulting services amongst all Emerging Vendors.

2. Late 2008-Early 2009 Global Recession – this was completely out of our control but it helped us significantly by forcing companies to look for lower cost BI alternatives that could deliver the same or better results than the high priced mega-vendor BI offerings. Making #1 more attractive to companies worldwide.

3. Agile BI – we announced our Agile BI initiative in Nov 2009 and received an enormous amount of press and positive reception from the community, partners, and customers. We’ve been showing previews and releasing RCs in Q1-Q2 2010 and put PDI 4.0 in GA at the end of Q2 2009.

4. Active Community – A major contributing factor to our massive industry adoption is our growing number of developer stars (the Pentaho army) that continue to introduce Pentaho into new BI and data integration projects. Our community triples the amount of work of our QA team, contributes leading plug-ins like CDA and PAT, writes best-selling books about our technologies and self-organizes to spread the word.

5. BI Suite 3.5 & 3.6 – 3.5 was a huge release for the company and helped boost adoption and sales in Q3-Q4 2009. This brought our reporting up to and beyond that of competitors. In Q2 2010 the Pentaho BI Suite 3.6 GA brought this to another level including enhancements and new functionality for enterprise security, content management and team development as well as the new Enterprise Edition Data integration Server. The 3.6 GA also includes the new Agile BI integrated ETL, modeling and data visualization environment.

6. Analyzer – the addition of Pentaho Analyzer to our product lineup in Sept-Oct 2009 was HUGE for our users – the best web-based query and reporting product on the market.

7. Enterprise Edition 30-Day Free Evaluation – we started this “low-touch/hassle free” approach in March 2009 and it has eliminated the pains that companies used to have to go thru in order to evaluate software.

8. Sales Leadership – Lars Nordwall officially took over Worldwide Sales in June 2009 and by a combination of building upon the existing talent and hiring great new team members, he has put together a world-class team and best practices in place.

9. Big Data Analytics – we launched this in May 2010 and have received very strong support and interest in this area. We currently have a Pentaho-Hadoop beta program with over 40 participants. There is a large and unfulfilled requirement for Data Integration and Analytic solutions in this space.

Thanks to the Pentaho team, community, partners and customers for this great momentum. Everyone should be extremely proud with the fact that we are making history in the BI market. We have a great foundation in which to continue this rapid growth, and with the right team and passion, we’ll push thru our next phase of growth over the next 6-12 months.

Quick story to end the note: I was talking and white boarding with one of my sons a few weeks ago (yes, I whiteboard with my kids) and he was asking certain questions about our business (how do we make money, why are we different than our competitors, etc.) and I explained at a high level how we are basically “on par and in many cases better” than the Big Guys (IBM, ORCL, SAP) with regards to product, we provide superior support/services, yet we cost about 10% as much as they do. To which my son replied, “Then why doesn’t everyone buy our product?” Exactly.

Our most recent figures show 156,000 copies of Pentaho software were installed so far this year. These numbers are not download numbers, but installed software that has been used. This includes Pentaho servers and some Pentaho client tools. These numbers do not represent only long-term installations, but also do not represent all Pentaho’s software distributions or installations. Since these numbers are not absolutel

An analysis by country of these numbers shows interesting results.

The Long Tail

This chart shows the number of new installations year-to-date for each country. Our data shows new Pentaho installations in 176 countries so far this year. That’s out of a total of 229 countries.

This is clearly a classic long tail. In fact after the first 20 or 30 countries it is difficult to read values from the chart. This second chart uses a log scale. The line on this chart is almost perfectly linear, showing that the distribution by country is pretty much logarithmic.

More than doubled new Enterprise Edition Subscriptions from Q2 2009 to Q2 2010.

Exceeded goals resulting in Q2 being the strongest quarter in company history and most successful for the 3rd quarter in a row.

Became the only vendor that lets customers choose the best way to access BI: on-site, in the cloud, or on the go using an iPad.

Led the industry with a series of market firsts including delivering on Agile BI.

Expanded globally, received many industry recognitions and added several stars to our executive bench.

How did this happen? Mostly because of our laser focus over the past 5 years to build the leading end-to-end open source BI offering. But if we really look closely over the last 12-18 months there are some clear signs pointing to our success (my top ten list):

Top 10 reasons behind Pentaho’s success:

1. Customer Value – This is the top of my list. Recent analyst reports explain how we surpassed $2 billion mark during Q2 in terms of cumulative customer savings on business intelligence and data integration license and maintenance costs. In addition, ranked #1 in terms of value for price paid and quality of consulting services amongst all Emerging Vendors.

2. Late 2008-Early 2009 Global Recession – this was completely out of our control but it helped us significantly by forcing companies to look for lower cost BI alternatives that could deliver the same or better results than the high priced mega-vendor BI offerings. Making #1 more attractive to companies worldwide.

3. Agile BI – we announced our Agile BI initiative in Nov 2009 and received an enormous amount of press and positive reception from the community, partners, and customers. We’ve been showing previews and releasing RCs in Q1-Q2 2010 and put PDI 4.0 in GA at the end of Q2 2009.

4. Active Community – A major contributing factor to our massive industry adoption is our growing number of developer stars (the Pentaho army) that continue to introduce Pentaho into new BI and data integration projects. Our community triples the amount of work of our QA team, contributes leading plug-ins like CDA and PAT, writes best-selling books about our technologies and self-organizes to spread the word.

5. BI Suite 3.5 & 3.6 – 3.5 was a huge release for the company and helped boost adoption and sales in Q3-Q4 2009. This brought our reporting up to and beyond that of competitors. In Q2 2010 the Pentaho BI Suite 3.6 GA brought this to another level including enhancements and new functionality for enterprise security, content management and team development as well as the new Enterprise Edition Data integration Server. The 3.6 GA also includes the new Agile BI integrated ETL, modeling and data visualization environment.

6. Analyzer – the addition of Pentaho Analyzer to our product lineup in Sept-Oct 2009 was HUGE for our users – the best web-based query and reporting product on the market.

7. Enterprise Edition 30-Day Free Evaluation – we started this “low-touch/hassle free” approach in March 2009 and it has eliminated the pains that companies used to have to go thru in order to evaluate software.

8. Sales Leadership – Lars Nordwall officially took over Worldwide Sales in June 2009 and by a combination of building upon the existing talent and hiring great new team members, he has put together a world-class team and best practices in place.

9. Big Data Analytics – we launched this in May 2010 and have received very strong support and interest in this area. We currently have a Pentaho-Hadoop beta program with over 40 participants. There is a large and unfulfilled requirement for Data Integration and Analytic solutions in this space.

Thanks to the Pentaho team, community, partners and customers for this great momentum. Everyone should be extremely proud with the fact that we are making history in the BI market. We have a great foundation in which to continue this rapid growth, and with the right team and passion, we’ll push thru our next phase of growth over the next 6-12 months.

Quick story to end the note: I was talking and white boarding with one of my sons a few weeks ago (yes, I whiteboard with my kids) and he was asking certain questions about our business (how do we make money, why are we different than our competitors, etc.) and I explained at a high level how we are basically “on par and in many cases better” than the Big Guys (IBM, ORCL, SAP) with regards to product, we provide superior support/services, yet we cost about 10% as much as they do. To which my son replied, “Then why doesn’t everyone buy our product?” Exactly.

If we look at the differences between closed and open source software development processes, we can identify aspects that can be generalized and applied to other industries and domains.

Open source development—that combination of transparency, iterative development with early-and-often releases, and open participation—leads to higher quality products. When we’re talking about software, people tend to think of quality in terms of bugs. But this is only part of the story of open development.

Defects can be anywhere within the requirements, design, implementation, or delivery processes, and we need to consider all of these areas to assess the full quality picture.

Requirements defects result in a product that does not meet the needs of the market or misses significant opportunities.

Design defects result in a product that tries, but fails, to meet the users’ needs.

Implementation defects result in a product that has lower customer satisfaction.

Delivery defects result in a product that no one hears about or can get hold of.

The earlier these defects arise in the process, and the longer they are unresolved, the more they cost to fix. When you compound defects in requirements, design, and implementation, the result is an expensive mess. (Windows Vista, anyone?)

A closer look at how this works inside the world of software development will yield larger principles to be applied to any project that aspires to use an open development model.

Under the closed model

Sales reps and account reps relay requirements to product managers, who then describe the required features to software engineers, who then design and implement the features and pass them to quality engineers, who try to test the features and report bugs that need fixing. After all this has happened, customers eventually receive the software. The lack of transparency means defects in the requirements and design don’t get spotted until after the product has been implemented and delivered. Another major problem is that, typically, the quality engineers don’t have any personal use for the software, so it is hard for them to imagine the different use cases that real users will have.

The final product suffers from the lack of connection between the software engineers and the software users.

Under the open model

A transparent requirements process includes consumers adding their own requirements and perhaps open voting to determine the most popular features. An open design process means consumers can ask questions about the design to validate it against their use case. Early-and-often releases during implementation mean that consumers can help find defects, which can be fixed early on. Fixing these defects during early development means features built later are not layered upon resolved defects from the earlier development.

Moving beyond software

So how do we apply these open principles outside of the software industry? Following are some good examples (and one bad one).

Open requirements

Some companies manage to meet unanticipated needs by enabling consumers to create new products for them to sell.

Amazon: As an independent author, Amazon allows you to sell your own books through their service. My mother wrote a book about British birth and death certificates. She uses a print shop in her village, and through Amazon UK she sells to a global market. Amazon sends her the customers’ addresses to mail her books to, and a check to cash, with Amazon’s commission already deducted.

Cafe Press: Create a cool slogan or logo, then upload it to Cafe Press and sell it on a wide array items. The designer needs almost no investment other than time and talent. Cafe Press gets an huge product set, over 250 million unique products—and a portion of each sale.

There are services with similar models for bands, musicians, photographers…

Open design

Lego: Using a free CAD design tool, Digital Designer, Lego customers can design new models, then order that kit from Lego. The creator can also upload the design to Lego’s Design by Me, so that other people can build it. The creator gets satisfaction and kudos, while Lego gets all the money. This builds community and revenue.

Nike:Nike ID lets you customize your own sports shoes. By allowing customization of the product appearance, consumers can create a unique-looking shoe that very few, if any, other people have. The Air Jordan basketball shoe has so many colors and customizable parts that even if every person on Earth bought five pairs, every pair could still be unique. Nike could take this further by letting people name their designs and allow voting for the best.

Local Motors: An open car company, Local Motors holds competitions for the concept and the design of their cars with open voting. Then they hold more competitions for the interior design, parts designs, exterior skins, and accessories. Then they put the vehicle into production. Their first is the Rally Fighter. They also encourage owners to participate in the manufacturing of their own cars. Their vision is to have small manufacturing facilities in most cities, hence their name. The effort put in by the contributors is stunning. The designs are awesome and it’s a highly supportive community.

Open delivery

Transparency and participation can also be used to help spread a message or engage consumers.

T-Mobile, UK:T-Mobile UK started with a successful advert where they staged a flash mob dance in London’s Liverpool St Station, an idea they must have borrowed from a Belgian radio station. Then they broadcast an open invitation to be part of their next event. Over 13,000 people showed up to find out the event was mass-karaoke. The result is really quite touching if you watch it all. It’s not often you can say that about a commercial.

Mountain Dew: Mountain Dew’s Dewmocracy was an open voting system for its next flavor. On their web sites you can see how the voting went down to the county level.

Kraft, Australia: An example of how to do it badly. When coming out with a new variant of their popular Vegemite spread, they had a naming competition. Fifty thousand people submitted entries. Unfortunately the winner was picked by a closed panel of “experts.” They selected “iSnack 2.0″ as the name, thinking it was edgy and cool. Public reaction was swift and very uncool. Within days Kraft announced they were revoking the name and opened a new poll to allow the public to choose the new name. The selected name was “Vegemite Cheesybite.”

Both the T-Mobile and Kraft campaigns involved large numbers of people participating of their own free will. The difference is that everyone participating in the T-Mobile event was part of the final product; if only 10 people showed up the result would have been very lame. In the Kraft case the closed selection panel proved to be the flawed element.

In all of these examples, there are similarities and differences. Some cases require a very flexible manufacturing process, while in others the inventory is electronic. Sometimes the individual contributors do their own manufacturing. In some cases the participants are highly skilled; while for others, little or no skills are required. But in all these cases (well, except the unfortunate Aussie Kraft example) the companies provide more choices, better products, or a better message by enabling open participation of individuals or communities.